Technology | In the $1 billion industry for new ultrasound equipment, one company is making costly technology accessible to more customers by refurbishing and selling pre-owned ultrasound equipment

A black-framed poster hanging on the manila walls of Global Medical Imaging (GMI) in Charlotte, N.C., bears a series of ultrasound images of a tiny baby developing in the womb and this slogan: "The birth of new possibilities in ultrasound systems."

In the shadow of a $1 billion industry for new ultrasound equipment, GMI is one of a handful of companies in the United States narrowing in on a niche market: making costly technology accessible to more customers by refurbishing and selling pre-owned ultrasound equipment.

On GMI's opening day in April 2002, founder Scott Ray and his dog were the only ones staring at an empty warehouse, but the business brought in $2 million its first year. Three years later, 30-plus employees are tightly packed into an operation with an overflowing warehouse and projected sales of $16 million.

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Mr. Ray, 37, offers a simple explanation for the company's swift growth: "There's a real unmet need out there for more options." While mega-hospitals with mega-budgets don't blink when shelling out $215,000-plus for new high-end ultrasound machines, smaller hospitals, as well as doctors' offices and nonprofit clinics with tight budgets, face tough battles when shopping for the vital equipment.

The company specializes in selling and servicing reconditioned ultrasound systems for OB-GYNs, as well as cardiology/vascular, radiology, and internal medicine needs. Ryan Dienst, Mr. Ray's managing partner and brother-in-law, says shopping at GMI can save a customer anywhere from 20 percent to 50 percent of the cost of a new machine, savings that add up to tens of thousands of dollars.

GMI buys the pre-owned equipment in good condition from a number of sources, including medical facilities that have reached the end of leases on ultrasound machines. Once pre-owned machines arrive at GMI's warehouse, the equipment goes through a thorough inspection to determine what repairs need to be made. In a small room off the warehouse, tiny tools and machine parts cover work tables where three young technicians pore over test images and painstakingly restore and test the equipment.

The equipment then moves back to a holding area in the warehouse where a separate set of technicians performs a white-glove test before the machines are shipped to customers. "By the time they leave our warehouse, the machines are in mint condition," says Mr. Ray.

GMI also offers extended warranties and training options that match those of many manufacturers. John Krieg, publisher of Medical Dealer, an Atlanta-based publication covering the pre-owned ultrasound market, says companies like GMI that offer high-quality equipment and high-quality service are "the future of the industry. . . . With hospital budgets shrinking and purse strings tightening, this is becoming a more and more viable option."

Pre-owned equipment dealers are also providing a more viable option for many pregnancy care centers to obtain ultrasound machines. Care centers across the country report that 60 percent to 80 percent of abortion-minded women who see an image of their unborn babies choose to carry their children to term. But the $20,000 to $30,000 price tag for a new ultrasound machine is a major obstacle for many centers.

Mr. Ray says GMI has sold pre-owned machines to a handful of pregnancy care centers, as well as other free clinics. Mr. Krieg's Medical Dealer reported that Conquest Imaging, a Stockton, Calif.--based, pre-owned ultrasound machine distributor, recently donated ultrasound machines and service to care centers in Southern California. "If this is what it takes to support these expectant mothers in keeping themselves and their babies healthy, then it becomes an easy decision to offer our company's resources," Conquest president Mark Conrad told Medical Dealer.

That's good news to Dwayne Hastings, vice president of the Ethics and Religious Liberty Commission of the Southern Baptist Convention (SBC). The SBC's new Psalm 139 Project aims to provide ultrasound machines to care centers across the country. Mr. Hastings, who is investigating purchasing pre-owned equipment for the program, hopes the cheaper machines might make it easier to "help women see the truth of Psalm 139."

The space elephant

How many problems does it take for "one of the most sophisticated systems ever produced by man" to become just another white elephant? A lot of people may be asking that about the space shuttle, but the space shuttle's downward spiral started long ago. In fact, it started in the Nixon administration.

In the days of triumph which were Apollo, NASA-still capable of bold vision-laid out a plan to explore and settle the solar system. Among its more prominent features were a series of follow-on moon missions which more resembled Lewis and Clark (or even John Smith) than the "space shots" of the 1960s. A Mars mission was on tap for the early 1980s, and an entire infrastructure was planned for near-Earth space, tasked with constructing spacecraft, facilitating private industry, and supporting genuine settlement. Barron Hilton even proposed expanding his hotel chain to orbit and to the surface of the moon itself.

To make all of this fly, NASA engineers knew they needed to get beyond expendable rockets and tiny capsules. They needed the heavy-lift capability of the Saturn V, but they needed it in a reusable form. And so the space shuttle was born. But not the shuttle we know.

Richard Nixon and congressional Democrats had very different ideas for the future. Quickly shelved were plans to make America's enormous investment in space pay off; in fact, three whole Apollo missions for which the equipment had been built-all that was needed was the fuel-were canceled, their rockets spread around the country as museum pieces. Space went overnight from "the way of the future" to a budgetary "necessary evil." And so it has been ever since.

Before it was a white elephant, the shuttle became a camel-"a horse designed by committee." And as feature after feature got compromised away, it went from truly revolutionary to somewhat adequate to barely competent.

Key among its stated requirements was to launch every two weeks. At closer to once every three months but on no vaguely predictable schedule, the "Space Transportation System" (which didn't even get color computer monitors until two years ago) saw its all-important cost per pound to orbit, well, skyrocket. What remained of America's space dreams crashed like Challenger and Columbia. This is the way of government planning, no different from Soviet steel mills or the equally botched Space Station. But the "space elephant" is finally meeting its gazelle: the free market.

Two weeks ago, Arlington, Va.--based Space Adventures announced it will commence tourist flights to the moon. They won't land, but two passengers-paying $100 million each-and one cosmonaut will soon fly around the moon, the first humans to do so in three decades. To compare, the Apollo program cost $235 billion; and one space shuttle launch-to low Earth orbit-costs around $1 billion and turns no profit at all.

And if that weren't enough, how about going to that Space Hilton? Sir Richard Branson, Paul Allen, and Burt Rutan will get you there, on the new Virgin Atlantic Airlines division, Virgin Galactic. The team has already proved its mettle by winning the Ansari X Prize, $10 million for building and flying a fully private space plane twice in two weeks last year. Mr. Branson's plans are bigger, with regularly scheduled service to space planned for 2007. Despite an initial ticket price of $100,000, all of Virgin's planned flights have already sold out.

So who needs NASA? Certainly government has an essential role in space, from Lewis and Clark--style expeditions to developing vital technologies, like scramjets, with military application. But it's long past time that the routine stuff-the lion's share of NASA's budget-got passed to a deregulated, empowered private sector. As with the Post Office's decision in the 1920s to contract out airmail delivery, such an arrangement will spark an explosion of new technologies, new industries, and in our time, a new frontier. Most of all, it will get government out of the way, in this case of the future. White elephants have no business flying. But mankind does, all the way to the stars.